The Senate Finance Committee is investigating whether prominent cryptocurrency investor Dan Morehead violated federal tax laws to save hundreds of millions of dollars after moving to Puerto Rico, a popular offshore tax haven. Senator Ron Wyden sent a letter to Morehead in January, questioning his tax compliance and how he may have applied a special tax break for Puerto Rican residents to income earned outside the territory.
The investigation is looking into wealthy Americans who have improperly used the Puerto Rican tax break to avoid paying U.S. taxes on income. Morehead, the founder of Pantera Capital, is being asked for detailed information on $850 million in investment profits made after moving to Puerto Rico in 2020. Morehead maintains that he acted appropriately with his taxes.
The ongoing investigation by the Senate Finance Committee, now under new chair Senator Michael D. Crapo, aims to uncover potential tax evasion related to the Act 60 tax break. In recent years, there have been efforts by the Justice Department and IRS to crack down on abuses of the system, with about 100 individuals identified for potential tax evasion.
Morehead, a former Goldman Sachs trader, founded Pantera Capital in the early 2000s, becoming one of the largest crypto investment firms. After moving to Puerto Rico, Pantera sold a large position generating over $1 billion in capital gains, with Morehead’s share totaling over $850 million. The committee has requested information on transactions and assets sold while he was a resident of Puerto Rico, including cryptocurrencies and the names of his tax advisers. As the investigation continues, it remains to be seen what actions may be taken in response to potential tax law violations.
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